Central Petroleum and its partner Macquarie Group have received approval to proceed with the development of the Mereenie gas project in Australia.

The joint venture (JV) partners’ subsidiaries have reached an agreement and signed authorities for expenditure related to the drilling of the WM26 well.

The decision also comprises an upgrade of the processing plant at a cost of $12m.

“Ideally the plant upgrade decision should have been made in February to ensure the work was completed by the time the NGP became operational.”

Last week, the partners secured the interim approval of joint marketing arrangements from the Australian Competition and Consumer Commission (ACCC).

Initially, the development was planned to take place alongside the commencement of operations of the Northern Gas Pipeline (NGP).

Central Petroleum managing director Richard Cottee said: “Ideally the plant upgrade decision should have been made in February to ensure the work was completed by the time the NGP became operational.

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“But Central was never, nor should it be, in control of regulatory approvals and while it will be tight Central, as operator, will use every endeavour to ensure the Mereenie processing plant has the capacity to sell 58TJ/day of sales gas by the end of this year.”

Due to the delay, only one of an initial two wells is set to be drilled. Funds for the second well will be directed towards the Mereenie plant upgrade.